SECP Asks Microfinance Institutions To Facilitate Borrowers in The Wake of COVID-19

In order to facilitate borrowers of non-bank lending companies (NBFCs), the SECP has allowed deferment of repayment of principal and rescheduling of loans, based on the borrowers’ requests.

To further facilitate small borrowers and microenterprises, the regulators have advised the non-bank microfinance companies (NBMFCs) to accept such requests made through SMS, emails and phone calls.

The commission has asked Asset Management Companies (AMCs) to provide investors account statements and other information through SMS or email in lieu of sending physical copies.

Additionally, to facilitate the asset management industry, SECP has increased the maximum period of borrowing by mutual funds for redemption purposes from 90 days to 365 days.

SECP has also advised the mutual funds to consider a reduction in their management fee, sales load, online investment/redemption, etc. Besides, the time to regularize regulatory exposure limit breaches due to redemption has been extended from four months to six months and time for the announcement of daily Net Asset Value (NAV) of collective investment schemes has been extended from 18:30 pm to start of next working day.

The deadline for submission of regulatory monthly returns for March 2020 has been extended up to April 30, 2020. Requirements for obtaining mandatory certification for mutual fund distributors have been relaxed and extended from six months to nine months.

The deadline for making necessary changes in constitutive documents/forms regarding risk categorization of collective investment schemes has also been extended for sixty days. Furthermore, the timeline for implementation of IFRS 9 for NBFCs has been extended by further one year

Also, the maximum limit for application of discretionary discount limit for AMCs for corporate debt securities has been enhanced to make adjustments in pricing for the purpose of NAV calculation.

To align the classification of non-performing assets across the financial industry, the period for classification of debt security to the non-performing category for a mutual fund is extended from 15 days to 180 days and rescheduling of such facilities is allowed during the extended period.

The SECP is closely monitoring the impact of the COVID-19 pandemic on the non-banking finance sector especially in the context of the sufficiency of the risk management framework, business continuity, encouraging work from home operations, ensuring investor protection/convenience and facilitating micro borrowers/micro-enterprises.

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